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4. Specialization and trade When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFs) for Shenandoah and Rainier. Both countries produce corn and lentils, each initially (i.e., before specialization and trade) producing 18 million pounds of corn and 9 million pounds of lentils, as indicated by the grey stars marked with the letter A. Shenandoah Rainier 42 36 36 PPF 30 LENTILS (Millions of pounds) LENTILS (Millions of pounds) 24 Slope: -0.50 18 PPP X-Intercept: 36.00 12 Y-Intercept: 18.00 12 6 19 24 30 36 42 6 12 18 24 30 36 42 CORN (Millions of pounds) CORN (Millions of pounds)Shenandoah has a comparative advantage in the production of v , while Rainier has a comparative advantage in the production of V . Suppose that Sh ialize in the production of the goods in which each has a comparative advantage. Mar specialization, the two countries lentils. lentils million pounds of corn and million pounds of neither com nor lentils Suppose that Shenandoah and Rainier agree to trade. Each co on producing only the good in which it has a comparative advantage. The countries decide to exchange 6 million pounds both corn and lentils Is of lentils. This ratio of goods is known as the price of trade between Shenandoah and Rainier. The (drawing graph shows the same PPF for Shenandoah as before, as well as its initial consumption arpor'nt A. Place a black paint {plus symbol) on the graph to indicate Shenandoah '5 consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Shenandoah Consurrudn After Trade EN'I'ILS {Mons of pounds) is | omework (Ch 03) Note: Dashed drop lines will automatically extend to both axes. (? Shenandoah 48 42 Consumption After Trade 35 30 LENTILS (Millions of pounds) 24 18 PPF 12 A 6 12 18 24 30 36 42 CORN (Millions of pounds) The following graph shows the same PPF for Rainier as before, as well as its initial consumption at point A. As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade.The following graph shows the same PPF for Rainier as before, as well as its initial consumption at point A. As you did for Shenandoah, place a black point (plus symbol) on the following graph to indicate Rainier's consumption after trade. Rainier 48 Consumption After Trade 35 PPF 30 LENTILS (Millions of pounds) 24 18 12 12 18 24 30 35 42 48 CORN (Millions of pounds) True or False: Without engaging in international trade, Shenandoah and Rainier would not have been able to consume at the after-trade consumption bundles, (Hint: Rase this question on the answers you previously entered on this nane. )Rainier Consumption After Trade PPF LENTILS (Millions of pounds) D 36 CORN (Millions of pounds) True or False: Without engaging in international trade, Shenandoah and Rainier would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) O True O False